Deck 1: The Role of Accounting Information in Management Decision Making

Question 1

Organisational strategies are the same as operating plans.

Answer 1

B

Question 2

Desirable employee behaviour can be motivated by trying employee performance evaluation and pay to long term or short term results.

Answer 2

A

Question 3

Relevant information relates to events that happened in the past and is therefore quantifiable and accurate.

Answer 3

B

Question 4

Management accounting is the process of gathering, summarizing and reporting financial and non-financial information used internally to make decisions.

Question 5

GAAP stands for Generally Agreed Accounting Practices

Question 6

Organisational information systems only collect accounting information.

Question 7

Organisational core competencies unrelated to the organizational vision.

Question 8

The design of the management accounting system structure is influenced by both external and internal factors.

Question 9

Relevant information helps decision makers evaluate and choose between alternative courses of action.

Question 10

Technological advances have allowed management accountants to develop previously infeasible cost and management accounting systems.

Question 11

A vision statement is a theoretical description of what an organisation should become.

Question 12

Higher quality information is more certain, complete, relevant, timely and valuable.

Question 13

It is easy to differentiate between internal and external reports.

Question 14

An organisational vision is a short term plan for maximizing financial results.

Question 15

Intellectual capital is a type of financial resource that is captured by the organisation's information system.

Question 16

Only large established organisations require a management accounting function.

Question 17

The use of sophisticated information systems means that uncertainty is eliminated.

Question 18

Cost accounting information is used for both management accounting and financial accounting activities.

Question 19

The starting point for managerial decisions is monitoring actual operations.

Question 20

Most organisations have one stakeholder.

Question 21

Value chain analysis can be used to inform decision such as outsourcing and strategic alliances.

Question 22

Research and development would be considered a downstream activity in value chain analysis.

Question 23

The central feature of the value chain is its focus on activities and processes rather than functions or departments.

Question 24

One way of classifying cost drivers is as structural or equivalent.

Question 25

Opportunity costs are the benefits forgone when we choose one alternative over the next best alternative.

Question 26

Structural costs drivers relate to the underlying economic structure of the organisational.

Question 27

Tuition fees are an opportunity cost of earning a university degree.

Question 28

Non-value added activities are unnecessary and wasteful activities that can never be eliminated.

Question 29

High quality information will generally have fewer uncertainties if it is based on viable assumptions.

Question 30

Value chain analysis can be used in conjunction with other management accounting developments such as Activity Based Costing and strategic cost management.

Question 31

Supply chain analysis is incompatible with value chain analysis as supply chain is only concerned with external suppliers.

Question 32

The manufacturing division of an oil refinery is an example of a cost object.

Question 33

Michael Porter was the first person to apply the generic value chain to the wine industry.

Question 34

The inputs or activities that cause total costs to increase or decrease are cost drivers.

Question 35

Cost objects are the same as cost drivers.

Question 36

Cost-benefit analysis means that all decisions will provide a financial benefit to the organisation.

Question 37

The value chain represents the key activities engaged in by an organisation or industry.

Question 38

Customers are prepared to pay for value added activities.

Question 39

Cost object is anything that costs are measured for.

Question 40

A value chain framework ignores customers and suppliers as it requires the organisation to focus on its internal processes.

Question 41

Which of the following statements regarding organisational vision is false?

A) Organisational vision is the same as operating plans
B) Organisational vision is one tool for expressing an organisation's main purpose
C) Organisational vision should be communicated to all employees
D) Managers sometimes divide the organisational vision into one or more written statements

Question 42

The term cost accounting is:

A) The precursor to management accounting
B) Commonly used to refer to financial accounting.
C) Encompasses both financial and management reporting
D) The same as budgeting

Question 43

Organisational core competencies can include:

A) A mission statement
B) Favourable economic conditions in the external environment
C) A code of conduct
D) An innovative product design

Question 44

How are organisational strategies related to core competencies?

A) Competencies are the tactics managers use to take advantage of strategies
B) Broad based organisational strategies are the same as the core competencies.
C) Strategies help managers exploit competencies
D) Strategies and competencies are actually two ways of expressing the same idea

Question 45

The following are all stages found in a management accounting system except for:

A) Processing
B) Output
C) Outcome
D) Input

Question 46

Types of decisions that managers make include all of the following except:

A) Choosing which products to sell.
B) Designing performance evaluation systems
C) Setting tax rates
D) Hiring employees

Question 47

Which of the following is the best example of an internal report that might come from an organisation's information system?

A) Environmental Protection Agency regulatory report
B) Cash flow plan
C) Income tax returns
D) Credit rating agency report

Question 48

Organisations that are highly decentralized typically have multiple business units and divisions overseen directly by the CEO.

Question 49

Total quality management is an example of a structural cost driver.

Question 50

Which of the following is an element of an operating plan?

A) Developing an organisational mission
B) Preparing financial statements
C) Defining core values
D) Outlining specific performance objectives

Question 51

Information gathered outside the organisation includes:

A) Customer preferences
B) Product design specifications
C) Product mix plans
D) Number of employees hired

Question 52

An organisational vision is sometimes broken down into: I Mission statement
II Core values statement
III Code of conduct
IV Statement of Stakeholders

A) I only
B) I and II only
C) I, II, and III
D) I, II and IV only

Question 53

Which of the following influences organisational strategies?

A) Tax rates
B) Financial statement results
C) Organisational vision
D) Number of employees

Question 54

Which of the following is true:

A) Internal reports present information for use within an organisation
B) Internal reports present information predominantly for use outside an organisation.
C) Internal reports are always for one time use only
D) Internal reports are also used for reporting to government

Question 55

An example of cost accounting information that is used in financial accounting is:

A) staff absentee rates
B) quality assurance processes
C) valuation of ending inventory
D) machine break down hours

Question 56

Organisational strategies are:

A) A key influence on the structure of the organisational information system
B) Secondary to operating plans
C) Reconsidered quarterly
D) Unrelated to long term goals

Question 57

The routine measuring, monitoring and feedback processes to managers relating to operations is:

A) part of the management accounting system's role
B) not required in organisations with only one product
C) required for long term strategic decision making
D) an organisational core competency

Question 58

Which of the following is a type of internal report produced by an organisation's information system?

A) News release
B) Analysis of potential acquisition
C) Credit report
D) Tax return

Question 59

Influences on the nature of the management accounting system include all of the following except:

A) organisational structure
B) geographical location
C) organisational culture and vision
D) types of decisions managers are confronted with

Question 60

Financial statements are:

A) Internal reports produced from an organisation's information system
B) Never used for internal decision making
C) Only true when they are audited
D) Necessary to meet external reporting requirements

Question 61

An organisation's value chain provides a framework for considering a range of management accounting issues such as: I Reinforcing initiatives such as activity based costing
II Breaking down traditional representations of organisational activity.
III Reflecting value chain relationships in terms of cost
IV Encourages a broader organisational view

A) I and II
B) I and III
C) II and IV
D) I, II, III, and IV

Question 62

Uncertainty may hinder a manager's ability to: I Adequately define a problem
II Identify all potential solution options
III Predict the outcome of various solution options

A) I and III only
B) II and III only
C) II only
D) I, II, and III

Question 63

Irrelevant information may be: I Useful in decision making
II Internally-generated
III Accurate

A) I only
B) I and II only
C) II and III only
D) None of the above

Question 64

Managers can make higher-quality decisions by relying on all of the following except:

A) More complete information
B) Irrelevant information
C) Better decision-making processes
D) Information having less uncertainty

Question 65

Higher quality reports are more: I Relevant
II Understandable
III Available

A) I and II only
B) I and III only
C) II and III only
D) I, II, and III

Question 66

Value chains are most commonly viewed at the:

A) organisational level
B) industry level
C) product level
D) management level

Question 67

The process of making higher quality business decisions requires each of the following except:

A) Distinguishing between relevant and irrelevant information
B) Recognising and evaluating assumptions
C) Relying on gut instinct to make decisions more quickly
D) Considering organisational values and core competencies

Question 68

Which of the following adjectives describes higher quality information?
I Complete
II Costly to develop
III Relevant

A) I and II only
B) II and III only
C) I, II, and III
D) I and III only

Question 69

Cost accounting practices has been influenced by all of the following except:

A) Increased competition
B) Technological innovation
C) Changing organisational environments
D) Conformance to GAAP

Question 70

A value chain is the sequence of business processes in which:

A) Costs are determined with activity-based principles
B) All non-value-added activities are eliminated
C) Value is added to a product or service
D) Managers determine prices

Question 71

Identify the irrelevant information in the following scenario: Eve is choosing between two part time jobs. Job A offers a high hourly wage but is located out of town and she will have to pay for public transport to get there. Job B is based locally and Eve can walk from home. The second job pays a lower hourly rate but there is more opportunity to pick up extra hours. The first job has a set number of hours. Last month Eve purchased a monthly gym pass for $80 for a gym located near Job
B)

A) Hourly pay rates.
B) Number or working hours.
C) Cost of the gym pass.
D) Public transport cost.

Question 72

Which of the following are NOT associated with higher quality decisions:

A) Timely information
B) Unbiased decision making processes
C) Ignoring uncertainties
D) Available and understandable reports

Question 73

Relevant information:

A) Does not vary with the decision taken.
B) Is only useful if there are only two alternative courses of action
C) Considers past costs.
D) Is always dependent on the decision and other factors.

Question 74

Start up internet companies have no need for a management accounting function because:

A) Even start up internet companies' need management accounting.
B) They have innovative profit offerings.
C) Their financial structure is uniform.
D) They have no physical product.

Question 75

Whether a given type of information is relevant or irrelevant depends on:

A) Whether it is expressed in financial terms
B) Its objectivity
C) Its relation to the decision to be made
D) Its accuracy

Question 76

In a decision to lease premises or to build office space in Brisbane, which of the following is relevant?

A) The cost of office space for sale in Melbourne
B) The costs associated with construction of the new office space.
C) The age of the employees currently working for the company
D) The personal preferences of the decision maker

Question 77

Cost benefit analysis is only necessary when:

A) There are opportunity costs to consider
B) There are more than two courses of action
C) When the decision concerns the reliability of product cost data
D) None of the above.

Question 78

Opportunity costs can be defined as:

A) The benefit foregone by choosing one alternative over another
B) The cost of collecting information for decision making purposes.
C) The costs incurred when the wrong decision is made
D) All of the above

Question 79

Frank is considering transportation modes to a client's office. He can drive his own car, at an incremental cost of $0.75 per kilometre, or take a company car. If he takes his own car, he can be reimbursed $0.55 per kilometre. If Frank makes his decision strictly from his personal economic point of view, what is the relevant net cost associated with driving his own car?

A) $0.75
B) $0.20
C) $0.55
D) $0.00

Question 80

Higher quality decisions result from:

A) Higher quality information
B) Higher quality reports
C) Higher quality decision making processes
D) All of the above